If I create an ERC-20 token and accept dollars from people in exchange of my ERC-20 token (with 1 token per dollar), would this be an asset-backed token or a security token?

The idea is to create an ERC-20 token in exchange of dollars from anyone. Or through token swap, exchange money to eth then to the ERC-20 token. The ERC-20 token can be used by token holders to buy merchandises/services and also be used to exchange back to money. Last but not least, it can be used to pay for a smart contract that will airdropped more ERC-20 tokens according to the performance of a certain stocks portfolio/index. Note that ERC-20 token will be used by the smart contract. The smart contract will either deduct or add tokens for the token holder according to the performance of the stocks portfolio/index. Is this token considered a security token?

To make the role of the "algorithmic trading" smart contract more clear, the smart contract is NOT the one that trades stocks in the market. There will be a separate backend service that trades stocks in the system using the reserved cash that the token issuer now "owns". The separate backend service will also call some transactions in the smart contract at the end of the day to deduct or add tokens to be airdropped (if any) to the participating token holders. Isn't this just another "service" that the token holder can opt for? This shouldn't make the token a security token, right? Thanks.

Please let me know if it is and if so, how would this comply with regulations.

I am still a bit confused about this because the token holder can opt to transfer his funds on an algorithmic trading smart contract that acts like a hedge fund on its own. Wouldn't this be just another service that is being provided by the ecosystem aside from enabling the users to exchange his tokens for cash, merchandises or services?
– AshTJul 18 at 9:41

Whenever you add the fact that your investors can receive dividends or can expect that the token will increase in value without the token having any purpose then it will be a security token
– strangethingspyJul 18 at 15:43